Hill negotiations move slowly under tight deadline

Oct. 11, 2013 - 02:34PM
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House Speaker John Boehner, R-Ohio, under pressure to come up with a way to avoid a debt ceiling disaster that could hurt the economy while not ignoring members of his own party who want to use the fiscal deadlines to force spending cuts, said he is just talking about a 'temporary increase in the debt ceiling' while launching discussions with President Obama on 'a way forward to reopen the government and to start to deal with America's pressing problems.' (Mandel Ngan / AFP)

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Democrats and Republicans are finally talking to each other about the twin fiscal crises of the debt ceiling and partial government shutdown, but a compromise to fix either problem remains illusive.

The Democrat-controlled Senate is focused on trying to fix the whole thing at once with legislation that fully reopens the federal government and increases by $1 trillion the current $16.7 trillion national debt ceiling. They also want to launch negotiations with the House to reach agreement on spending caps and debt reduction so they can pass full-year appropriations for federal agencies before the end of the calendar year.

The Republican-controlled House is discussing a more limited six-week extension of the debt ceiling while keeping the government in partial shutdown. They also want to begin negotiating with the Senate and White House on budget priorities — but they want to make certain such talks include a push to reduce federal entitlement programs while excluding any talk of tax increases. The short extension creates another opportunity for House Republicans to push their idea of pairing a debt limit increase with equal cuts in spending.

It is not clear whether there are enough votes in the House or Senate to pass either plan.

House Speaker John Boehner, R-Ohio, under pressure to come up with a way to avoid a debt ceiling disaster that could hurt the economy while not ignoring members of his own party who want to use the fiscal deadlines to force spending cuts, said he is just talking about a “temporary increase in the debt ceiling” while launching discussions with President Obama on “a way forward to reopen the government and to start to deal with America’s pressing problems.”

Senate Majority Leader Harry Reid, D-Nev., left an Oct. 10 White House meeting to talk strategy with President Obama saying he’d be willing to negotiate anything with the House after the debt ceiling is increased and the government is reopened, but he’s willing to accept temporary extensions.

There is a clock ticking, at least in terms of the debt ceiling. Treasury Secretary Jacob Lew said Oct. 10 that the U.S. will reach the debt ceiling “no later than Oct. 17,” creating a default situation in which, for the first time in 224 years, the U.S. will be unable to pay all of its bills. “How can the United States choose whether to send Social Security checks to seniors or pay benefits to our veterans?” Lew asked the Senate Finance Committee.

Failing to raise the debt limit will affect financial markets and “everyday Americans,” he said. “Between Oct. 17 and Nov. 1, we have large payments to Medicare providers, Social Security beneficiaries and veterans, as well as salaries for active-duty members of the military. A failure to raise the debt limit could put timely payment of all of these at risk.”

It isn’t just workers and beneficiaries who would be hurt, Lew said. Payments to government contractors and vendors would also be among the expenses in the pile to be paid.

The House of Representatives has approved a plan under which Treasury would pay creditors first and then use remaining funds, if any, to pay other bills, but Lew said that doesn’t really protect the U.S. economy because the nation would be in default if it fails to pay any bill — and the economy is already hurting because of the partial shutdown. “The only way to avoid further self-inflected wounds to our economy is for Congress to act,” Lew said.